AB-284 Update: Episode #190

Hello welcome to Todd Miller TV. Sorry I’m not in the conference room today, can’t find a white board so I had to find something to write on to show you all this. So I’m just out here in our company area. A piece of glass on the wall. Super low tech. I don’t have a big studio. I don’t have ton of time to get professional editing and all that for something like this. I just wanna get the information to you so I apologize if it’s kinda rough. As you probably saw Brian Lebo’s video from a few months ago where he talked about the AB-284, and what was happening with that and the potential implications. And he just did another recently, I just want to sort of talk about that and go over the numbers. I don’t dispute a lot of the stuff he says, I mean, absolutely at some point we don’t have any trustee sales that we’re gonna/it’s gonna affect the inventory to some extent. The issue I’ve always had is with the timeline. The timeline was we’re run out of properties in the spring. We’ll be out of properties in the spring. So that was said over and over in the video, and it was re-iterated in the last video that it was “here we are, it was already happening” But I just wanna talk about this not happening. We’re not gonna see it for quite some time and this is why. So in the original video, I went over the numbers. The NODs, Trustee Sales and REOs at the time, there were 35,518 total properties at some stage of foreclosure or it come on the market yet available but they didn’t have any offers or they were in the REO agents pipeline waiting to be listed. 35,518 it was 551 days of inventory. So its over a year’s worth of waiting for that to flow out. So, now we’re gonna step ahead and we’re gonna look at where we are today, 90 days later. So 90 days later, the NODs are certainly down. They’re down at 21340. That’s the total number of NODs from the on es that were filed a year ago to the ones that were filed yesterday. Okay. This has been a drop, almost directly because of AB-284. Notice the Trustee sales are down as well, 3140. And the number of REO’s up slightly as well. That leaves as a total of inventory/potential of 29,330. So, you’re pricing yourself, well 29,330 what does that mean? Well, what that means is, we had that number before of 64/day. There were 64 houses sold per day. So how long will this last? Well, I did a video 90 days ago, so 90 days ago we’re at 551, we should be at 461 right now. We should have 461 days of inventory. That’s clearly not gonna run out in Spring. Spring starts in 2 months, we’re not gonna run out of inventory. When I took this number and divide it by 64, I got 458 days. We have 458 days of inventory. Yes it’s a less. The other thing I use to back up all this number’s was the average time to foreclose. The average time to foreclose is being reported as 330 days. Okay. What that means is it’s taking 330 days from an NOD is filed until it gets foreclosed. That’s almost a year. What that means is, the properties today that are coming form Trustee sale, the NODs were filed in about March of last year. So what that means is, that the lack of inventory at the Trustee sale form October, it’s gonna take 33o days to filter through. So this idea, that in the Spring we’re gonna run out of inventory, is not true. We still have a ton. 458 days, it’s not a lot. REOs in themselves are probably 25% of the market. It’s not gonna be devastating. It’s not gonna be anything. It’s gonna create an opportunity for those people right now that are buying houses to go get a great deal. Okay? Because inventory will tend to decrease and hopefully prices will go up. Until prices go up, home builders can’t build and we can’t get our economy going. So there’s not all terrible news on this, but I just want to respond to the video. We’re still getting REO inventory. We’re about 5% market share. We got 22 so far this month between all the people here at our company who do REO. And I/take that backward 2% market share so, if you multiply that times 50. You kinda see what everybody else is getting. So people are still getting REOs, there’s still inventory out there. Just look in the MLS, there’s plenty of house to buy still. There will be for quite some time. we’re almost at the Spring. I’ll do another video about 3 months when we’re in the Spring. Show you we still have properties, there’s still properties at the Trustee sale. They didn’t happen, you know, is it proposed? Yes, if we have a year of no Trustee Sale file then we’re gonna have an issue in the air. But until then, we’re fine. Any way, I just thought I would share that with you. Sorry for the crudeness the lack of professional editing and music and the script and all the other stuff. You know, a really nice backboard, a suit and all that stuff. So I just wanted to get the numbers out. And if you watched my videos before you’ve seen that this is sort of how I roll, which is all good. Anyway, so that is my update for today and I apologize again because it’s like the sun is just rising so it’s not super well lit in here. But you probably got the information. If you want to get information as I do this videos, there’s 2 ways to do it. One is, follow me in Twitter at LasVegasTodd, just follow that and as I do the video it get posted to Twitter automatically or on toddmillertv.com. If you go in there, there’s a little RSS feed. You can just put your e-mail address in and then it’ll/everytime I do a video it will just shott you an e-mail. That is the update and hope to see you on another video. Thanks!

Thanks the the feedback. But we still have 19,000 houses in some form of “not sold” status and over 5,000 are still available. The frenzy is because buyer demand has increased to the highest level in 10 years.

I enjoy watching your video updates and have been watching them for several months now. However, I do have to agree with R Moss above about your position that AB 284 would not affect inventory was off base. AB 284 has significantly affected available inventory in Las Vegas. As of today, 5/9/12, there are only 4,515 SFR homes on the market that are in ER (not under contract) status and this number continues to decline week by week. Since the number of NOD’s (Notice of Default) and NOS’s (Notice of Sale) filed by the banks are a fraction of what they were before AB 284 took effect in October 2011, fewer homes are coming on the market every month. Basic supply and demand tells us that if the supply drops while the demand remains the same, the price will go up. If the demand increases as the supply goes down, the price goes up even further. The demand has increased because the market is aware that inventory is shrinking and prices are moving upwards. In an effort to get a bargain deal before prices go up much more, buyers are in “frenzy” trying to purchase before it’s too late. It’s nice to see the property values going up for the first time since the bubble burst, but when you consider that more than half the mortgages in town are still underwater, AB 284 has created a market with an artificially short supply while there are still so many people not paying their mortgage(s). The real question is how long will the short supply and “frenzy” last and will we see another correction before our market fully recovers???

CJ, what we are experiencing has little to do with AB-284. There is no AB-284 in Arizona and they are worse off than we are. Same in California. What we are experiencing is that the banks have settled with the states and they are holding back the inventory because they are trying to do loan mods, reductions, etc. AB-284 hasn’t hit yet. We know this because we buy properties EVERY DAY at the trustee sale and flip them in the MLS. Its the ones that go back to the bank that disappear. AB-284 is a late summer early fall problem. Also demand is the highest since 2004. Those two combined far outweigh AB-284.

I agree with you that the banks trying to do more loan mods and principal reductions than before, further impacts the available inventory. However, I have been buying at the Trustee Sale myself for 2 years now and I have seen a major decrease in the number of properties going to sale since February of this year when the impact of AB284 started to show. It is not a coincidence that once AB284 took effect in October 2011 that the NOD’s and NOS’s immediately dropped by 75% or more and haven’t come close to returning to pre-AB 284 levels. I believe this is having a far greater impact on our inventory than the small increase in the number of loan mod’s and/or principal reductions. You said that the ones that go back to the bank are the ones that disappear. As you know, once the bank owns a home through foreclosure, it’s too late for a loan mod and/or a principal reduction. These homes become part of the “shadow inventory” that we hear so much about. Eventually, these homes have to come to the market. Behind the scenes there is a lot that goes on within the banks in regard to their rules and regulations that force them to manipulate their inventory because the can only have so many bad assets/non-performing loans on the books vs. cash on hand. They also have financial reporting to their shareholders that causes them to make decisions that seam contrary to common sense to those of us on the outside. This is a whole other discussion though. If AB-284 were repealed tomorrow, I think it would hard to argue that can we wouldn’t see an immediate spike in the number of NOD’s and NOS’s filed. Ultimately, this would result in more available inventory. While it may appear that AB284 was crafted with good intentions to stop the very small percentage of illegal or unwarranted foreclosures, it certainly doesn’t appear that its true impact was fully understood by lawmakers…or maybe it was?

Todd Miller, you are way off. AB284 has affected the market and the shadow inventory continues to build. What is coming is law suits from the bank to the homeowner and they will ask for the deficiency judgement at the same time. This current market is a bubble and it will pop!

From the time a NOD is filed until it hits the market is averaging about 500 days in Nevada. Some shorter and some longer. AB-284 has only been in place for about 270 days which means that we will start seeing the effect of it soon. The big problem is that the national mortgage settlement deal that occurred in January has caused this mess. This is a nationwide problem. Just call any agent in Sacramento, Phoenix, Riverside, etc and they’ll tell you the same thing. They have no inventory. The bank are holding back on their current inventory and AB-284 isn’t what people have made it out to be. EVERY BANK has filed NOD’s since AB-284. EVERY ONE. It didn’t STOP anything. AB-284 doesn’t stop foreclosures. It just makes them sign an affidavit, which they are apparently doing. See my video about the NOD list. The banks are all holding back on their inventory to meet the $17B agreement with the government.